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Shark Tank (Photo credit: Benson Kua)

I don’t watch much TV and had never watched ABC’s Shark Tank until one Saturday afternoon last month. Let’s just say I dove into the deep end and ended up watching the entire season without so little as a bathroom break. Yes, I love the show because of the passionate entrepreneurs and their brilliant product ideas, but more importantly, I’m shocked at how ill prepared some of the entrepreneurs were during the negotiation process.

As someone who has grappled with similar issues when fundraising for Retention Science, I could relate to the entrepreneurs on Shark Tank and thought I’d share my thoughts after the Shark Tank marathon.

Do your homework

I’m not talking about Googling your investors or memorizing their bios. Go beyond the basics and conduct in-depth research to get to know them and their businesses inside and out. This not only helps you prepare, but it allows you to evaluate the value each investor brings to the table in the short and long-term.

Almost everyone who walks into the tank does this. Each entrepreneur knows the sharks’ interests, likes, and dislikes, etc. and most of them even create custom samples for each judge.

A good way to get in depth knowledge about potential investors is by researching their partners and associates. Learn about the people they’ve worked with as well as the other companies they’ve invested in and see if you can incorporate their previous investment in your storytelling. I’ve also reached out to founders of the companies in an investor’s portfolio to get feedback / guidance from them.

Recognize it’s not just about the money

Cash shouldn’t be the only factor when fundraising and choosing investors. The network and industry-specific experience of the investors is equally, if not more, important.

One of my favorite Shark Tank moments was in season three, when Alashe Nelson of EzVip, a website that lets

people pre-purchase event tickets and bottle service, had to choose between two offers: one from Daymond John and Mark Cuban who had an offer of $150 thousand for 30% plus an A-list artist to be the face of the brand, and the other was from Robert Herjavec and Kevin O'Leary for $150 thousand for 20%.

Alashe decided to go with the first offer, even if it meant giving up more equity because he knew Daymond and Mark’s connections could add more value to his business long-term. And it looks like he made the right decision. EzVip received a lot of traction, and is now supported by recording artist, Pitbull. Daymond has said that it was one of the best deals he made on the show.

English: Mark Cuban (Photo credit: Wikipedia)

Determine how low you’re willing to go

Before going into a negotiation, you should know how much company equity you are willing to give up and stick to it. This will enable you to make decisions and counter offers based on numbers vs. emotions.